CLA Outlook — Key Insights for Sound Financial Strategies

Take steps to prepare for changing scenarios.
May 26 Weekly Insights
Moody’s downgrades the credit rating of U.S. debt
In the days following the downgrade, the 10-year treasury yield rose to 4.61% from 4.4%. Another factor weighing on treasuries is demand for long-dated maturities appears to be waning. These recent developments support CLA’s view interest rates may remain higher for longer.
Fear of tariffs and economic slowdown impact first quarter earnings calls
More companies are using the term “recession” during first quarter earnings calls. CLA believes it’s premature to declare a recession is likely, though economic activity is slowing due to the Federal Reserve’s restrictive monetary policy, which is likely to remain in place until the Fed is confident inflation is going to hit its 2% target.         
Use both beta and correlation when designing portfolios and assessing risk
Beta measures an investment's volatility relative to the market, with values less than one indicating lower volatility and values greater than one indicating higher volatility.  Correlations range between -1 to +1 and indicate the degree two investments move in unison or in opposite directions. CLA uses both concepts when constructing long-term portfolios and when making intermediate-term tactical tilts.
Strategic Steps
5 Actions Portfolio Owners Should Take Considering Market Volatility
During uncertain times, successful investors take strategic steps to prepare for varied scenarios. Explore key actions you can take to navigate these periods:
  • 1. Review your asset allocation
  • 2. Harvest tax losses
  • 3. Make Roth conversions
  • 4. Put excess cash to work
  • 5. Consider gifting strategies
  • We can help
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